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How to Attract Angel Investors for Startup

27/03/20248 minute read
How To Attract Angel Investors For Startup

Have you been looking for ways to grow or even scale up your existing or startup business?

I guess you want to come up with new products and services, and you probably need some cash to make this an absolute reality.

If funding is required for your business, the angel investment option is not a bad one. It’s not easy catching up with these investors because they are always busy with many people and even things in serious competition for their attention and money.

How do you attract angel investors? In this post, we will carefully discuss ways to attract angel investors who will be ready to invest in your existing or startup business. Interestingly, this isn’t some fairy tale. So, let’s get started!

What Angel Investment Entails

Angel investment is simply a process in which an investor or private individual exchanges ownership equity while putting money into a business.

Angel investors can be called many names, including private investors, angel funders, seed investors, and even informal investors.

Angel investors project funds mostly into promising startups that need actual capital to get started. Most angel investors offer five- to six-figure sums, depending on the kind of business in question.

Benefits of Using Angel Investment for Startup

The benefits of partnering with angel investors are indeed numerous; they include the following:

  • They may provide the coaching and counseling your business needs to succeed.
  • With enough evidence of your business growth, a long-term partnership with angel investors can be established; this alone might make it easier to get more financial support far beyond the early stage of investing.
  • Another benefit of angel investment is the fact that you have no worries about paying back debts since you already had to give away part of your company equity or shares in exchange for capital. Remember? Some of the loans offered by angel investors are later converted to ownership equity.

Downsides of Using Angel Investment for Startup

The downsides of angel investment that you should look out for include:

  • As company shareholders, angel investors might not have the same opinion and approach to your business goals, which may affect your planned business strategy.
  • Angel investors will want their expectation of seeing a return on Investment (ROI) not to be prolonged beyond a certain time frame, and this might put you and your team under pressure.
  • By exchanging your company’s equity for financial investments, you tend to share the ownership and intuitive control of the company with someone else. It’s totally not 100% owned by you anymore.

What Angel Investors Look Out for in a Startup

Any investor won’t want to invest just anywhere. He or she has to be sure that the business can be sustainable in the long run , before injecting funds into it.

Below are some of the few important things most angel investors look out for before they invest in your business.

Read Also:  10 Strategies to Scale Your Startup for Sustainable Growth

A Business With Clarity

Your business should be one that is easily understood if you want to attract angel investors. Private Investors have become high in demand, and so you should not expect anyone to spend their time and money on Startup or existing business that has an absolutely unclear business idea.

With a vague business idea, you’ve already lost an angel investor. Investors tend to go for businesses with defined business ideas that have the potential of offering a good return on investment (ROI).

Angel investors are also most likely to invest in businesses with a good reputation. Getting investors might be difficult If your business is prone to legal troubles in years to come.

Have a Good Pitch

You should never overlook the benefits a good pitch can bring to your business. A good pitch should definitely contain all the necessary information the investor will need concerning your business. Without a single detail being left out. Having a good pitch is one of the ways to attract angel investors easily.

You shouldn’t also forget that most angel investors are extremely rich entrepreneurs with lots of surplus money in their bank accounts. So what most of such people need is just mind-blowing business ideas from you, and guess what? They will only invest their money for ideas that seem thrilling and very much realistic to achieve.

Establish a Strong Network

You don’t have to wait until you meet enough people, because you just might meet them. Don’t hesitate going for business meetings, conferences, events and the likes whenever you have the opportunity to.

Asides creating a Strong network with the aim of attracting angel Investors, you may also have the chance to network with other businesses that’ll help you grow your company. Don’t forget that ideas can be shared anywhere and from anyone. It’s left for you to be smart enough to know one when it’s staring at you in the face, yeah.

Networking is essential to get the right knowledge and even discover the right resources, to even discovering talent to be part of your team. A strong network can get you easy access to numerous resources that could help your business flourish.

By proving to angel investors that you have a reliable and strong network you can always rely on, they will then be willing to put their doubts behind them and make sure your business succeeds with their investment. It’s a good way to attract these angel investors.

Create a Reliable Management Team

Angel Investors are always all out to support businesses that have a reliable management team. The investors will need to have the trust that your business is in able hands with the right experience and exposure, with a significant level of competence and trust.

A solid management team is a sure way to easily attract angel investors. This is because leadership greatly determines the future course of action of any enterprise.

Read Also:  Crafting a Compelling Pitch Deck - 7 Tips for Capturing Investors’ Attention

Set Up a Good Sales Pipeline

What is a business without sales? The investors have to be convinced that people are very much willing to buy your products or services. That means your products and services have no other choice but to stand out in the market.

You need to be very much prepared to prove to Investors that your market potential is good enough to come up with a guaranteed investment. Create a legit track record of the sales you have recorded, and come up with ways you plan to sustain and expand your sales Pipeline to grow your business.

Build Up Valid Financial Projections

It’s very crucial to build up financial projections to prove to angel investors that their investments will grow and return on a steady basis. This might not be a walk in the park as no investors will provide funding based on excitement or maybe because you have a beautiful face.

In order to build up these financial projections, you will need the services of a trusted accountant. The accountant should never try to make it or come up with fake figures, as that might end badly.

Angel Investors are always impressed when entrepreneurs know their numbers and keep the numbers real with no alterations.

There you have a few ways to attract angel investors. However, you should know that coming up with angel capital might not be so easy, but keep trying.

The Bottom Line

Angel Investors are not only business financiers but also advisers and mentors. You need to be intentional about getting reliable angel Investors. The steps in this article will greatly increase your chances of attracting angel investors that will provide the kind of funding you need for your business to thrive smoothly.

It might seem a bit difficult or unrealistic, you have to be persistent and believe in your business more than anyone else.

Frequently Asked Questions (FAQs)

How Do I Convince My Angel Investor?

You can convince your angel Investors by:
1. Simply being real.
2. Being genuine and a hundred percent transparent.
3. Leveraging on past successes you’ve recorded.
4. Demonstrating customer demand and showcasing the potential market size amongst others.

How Do Entrepreneurs Attract Angel Investors?

The first and most essential step to attracting angel investors is to have an extremely good business plan. The business plan should contain your company’s mission statement, a comprehensive, detailed description of your services, the target market, the marketing strategy you want to employ, financial projections, and lastly, our reliable management team.

Where to Get Angel Investors?

You can find angel Investors on business networks like LinkedIn and AngelList. And offline, you can find them by proper and intentional networking.

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